Entrepreneurial Toolkit #2: “Don’t Drink Your Own Bathwater”

In the tech heyday of the mid-1990’s, my favourite US investment banker, Mark Slater (formerly of Hambrecht & Quist) had a strategy to avoid CEOs that, as he so eloquently put it, “Drank their own bathwater”. Mark had identified the tendency amongst CEOs, even entire executive teams, to become so satiated with the power and glitz of riding the waves of technology/media hype, that the corporate adulation goes straight to their head.

Ego and ambition, never faults in themselves, taken to extremes tend to cloud better judgment. Anyone who has visited their capital city, like Washington, London or Ottawa, has witnessed the same effect that all that marble and walnut lining the corridors of power have on newly elected Members of Parliament or Congress.

I’m sure all of us entrepreneurs have been seduced by the siren call of their own PR. I know I have. But long ago I learned that, no matter how big the entrepreneur’s ego, it is critical to be self analytical and have enough inner humility and judgement to resist the corrupting force of power and spin. Every company has faults, challenges and issues to deal with. In truth, no matter how great the press or the wave being ridden, no company can entirely escape the buffeting of real world forces and the ups and downs of a cruel world. Navigating such turbulent waters is simply another challenge entrepreneurs need to face every day.

Ed Iacobucci, CEO Dayjet

One example, and a person I would consider a mentor and role model, is Ed Iacobucci, founder of Citrix Systems and more recently Dayjet. Ed, an industry visionary, pundit, technologist supreme with energy and a will to win, is a man for whom I have infinite respect. Specifically, Ed has weathered highs and lows like almost no one else I know. For example, when I first met him, he was CEO of an almost bankrupt startup selling multi-user OS/2 technology (go figure). Later, after re-targeting the Citrix product family around Windows NT, his company was a NASDAQ darling and on a roll.

Imagine being in Ed’s shoes when, at the February H&Q conference at the Westin St. Francis in San Francisco, he learned that Microsoft had just informed them that they were planning to compete with their core product, Ed led the charge with the team. First he did the honest thing and issued a press release, which had the effect of instantly wiping out over 80% of Citrix’s market capitalization. Without even going home, Ed flew straight to Redmond and led the 24×7 multi-month battle to save Citrix from being “Quickenized” by Microsoft. A $150 million deal saved the day, but the key fact was that Ed remained honest to himself and his shareholder base throughout, which is no simple task for a major public company given shareholder disclosure rules. Several years later, when his stock price touched $50, making Citrix worth a cool $20 billion, his only comment was a modest and realistic “that stock price is a lot to live up to.” Perhaps this illustrates why I have such admiration for Ed as an individual.

For every Ed Iacobucci, there were many dot com era fibre and telecom firms that, despite all hard data to the contrary, ran their businesses into the ground on the false proposition that the interent was doubling every 90 days. And, make not mistake, sheer hubris was the major contributing factor.

In summary, humility and being self critical (“not drinking your own bath water) coupled with fearless passion (the killer instinct and laser beam focus) are two of the most important qualities in the Entrepreneurial Toolkit. Well balanced, and taken together, they are a winning combination. Most importantly, like almost all personal success factors, they can and must be learned as only a rare few are born with this wiring.